Mexico to audit its gold holdings at the Bank of England

Photo: EPA

The Mexican Government Audit Office has issued an official statement, criticizing the Bank of Mexico for not auditing the gold it has supposedly bought and stored at the Bank of England. The auditors ask the Central Bank of Mexico to “make a physical inspection with the counterparty that has the gold under its custody, in order to be able to verify and validate its physical wholeness and compliance with the terms and conditions of dealing with this asset.”

Global Financial Intelligence and the Gold Anti-Trust Action Committee report that the actions of the Mexican Government Audit Office are the result of a long campaign lead by Guillermo Barba, a Mexican civil activist and investigative journalist.

The Government Audit Office has concluded that 95% of the gold reserves of the Bank of Mexico are stored abroad and 99% of this gold is stored with the Bank of England. However, the Mexican central bank has never inspected the gold it bought, has not performed purity tests on it and doesn’t even have a list of all the gold bars stored in London. In their current state, Mexico’s gold reserves are no more than “paper gold” in the meaning that the Bank of Mexico doesn’t have any physical gold, but mere “claims” on a certain amount of gold supposedly held by the Bank of England.

Bill Gross, the Chief Investment Officer of PIMCO (the world’s largest bond fund) has recently said that “Central banks distrust each other”. The pending audit of the Mexican gold reserves is not a singular case of actions that show a high level of mutual distrust among central banks. The latest move of the Bundesbank, which demanded the repatriation of its gold holding from Bank of New York, Bank of England and Banque de France, is another sign of distrust in the world’s financial system. It is quite probable that after the audit, Mexico will decide to repatriate its gold holdings, possibly prompting other countries to follow suit.

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